Interest Rate Predictions Repeatedly Proven Wrong as Unknowable Forces Shape Unpredictable Path
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Central bankers and investors have repeatedly made incorrect predictions about the future direction of interest rates, showing that no one truly knows where rates are heading.
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Factors like AI, government borrowing, and globalization trends are posited to impact future rates, but these narratives are speculative rather than reliable forecasts.
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Historical data shows little consistent relationship between economic factors and real interest rates over time, suggesting inflation is driven more by real-world events while rates follow central bank policy.
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Bond investors have lost trillions recently by assuming rates would stay low, but it's understandable given rates can stay ultra-low for decades as in Japan before suddenly shifting.
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While a downward trend in rates is seen over centuries, historics show long cycles of rising and falling rates over 30-40 year periods, so the current cycle likely has years left to run with more surprises in store.